In Summer 2022, and as part of the Social Care White Paper, the Government through the Department of Health and Social Care (DHSC) instructed all local authorities in England to carry out cost of care exercises for 65+ care homes and 18+ domiciliary care in their respective areas.

Local authorities were required to survey a range of providers (representative of the local market) as part of this information gathering exercise in order to improve their understanding of the actual costs of delivering care in their area. Local authorities were required to use the exercise to determine and report upon the median actual operating costs for the following categories, plus evidence and values for return on capital and return on operations.

Together these make up the fair cost of care.

The categories were:

  • 65+ care homes
  • standard residential care
  • residential care for enhanced needs
  • standard nursing care
  • nursing care for enhanced needs
  • 18+ domiciliary care

In addition to the median cost, the cost of care report was required to capture the lower quartile and upper quartile costs. This was to reflec a range of local costs. The median figure was also to enable transparency and assurance that fee rates were moving towards a 'fair cost of care'.

DHSC recognised that this may oversimplify what is a complex picture of care and support needs. But for data collection purposes it was necessary to find a way of standardising cost reporting.

The outcome of the cost of care exercise was not and is not intended to be a replacement for the fee-setting element of local authority commissioning processes or individual contract negotiation.

As many local authorities move towards paying the what is being termed a 'fair cost of care', DHSC expected that actual fee rates paid may differ due to such factors as rurality, personalisation of care, quality of provision and wider market circumstances.

Purpose of the cost of care exercise

The Government expected that the cost of care exercise was an opportunity for local authority commissioners and local care providers to work together to arrive at a shared understanding of what it costs to run quality and sustainable care provision in the local area which were reflective of local circumstances. The Government also saw it as a way for commissioners and providers to work together to shape and improve the local social care sector and identify improvements in relation to workforce, quality of care delivered, and choice available for people who draw on care.

Activity with providers In Sandwell

In preparing its response Sandwell Council engaged ARCC-hr Ltd to carry out extensive engagement with our commissioned providers. ARCC-hr Ltd had been selected by the Local Government Association (LGA) to develop the Cost of Care tool for domiciliary care and have extensive knowledge and experience in working with both Local Authorities and providers around financial sustainability and fee setting. In addition to a number of provider workshops ARCC-hr Ltd offered individual sessions with providers in order to secure maximum engagement in the process.

Sandwell's Response to Government and Department of Health and Social Care

As part of the Cost of Care exercise local authorities were required to present certain documentation to the DHSC and were also expected to publish their final Market Sustainability Plans (MSP's) and Annex B's on their websites.

Sandwell's Annex B's for 65+ care homes and 18+ domiciliary Care can be found below and the MSP will follow later this month.

Annex Bs

Annex B for 65+ Care Homes

Annex B for 18+ Homecare

Market Sustainability Plan (MSP)

Sandwell's Market Sustainability Plan was submitted to DHSC on the 27th of March 2023

Download a copy of the MSP

Please Note: Due to the very technical nature of the response required by DHSC, the information published on this page is intended for providers of adult social care services commissioned by Sandwell Council or those those providers who provide support to those who fund their own care.

We will publish an easy read document relating to aspects of Cost of Care exercise and the wider Charging Reforms that will have relevance to members of the public, and the families of, who fund their own care in due course.

Wider Charging Reforms

Reports on a survey of the costs of care homes for older people and visit-based home care services carried out during summer 2022 to prepare for the planned (but subsequently deferred) implementation in October 2023 of reforms to adult social care funding.

The Government's Department of Health and Social Care (DHSC) asked all local authorities responsible for adult social care to survey care homes for older people and home care services in their area about the costs of providing their services. The specific reason for carrying out these surveys in 2022 was the plan to change the statutory framework for adult social care in ways which would entitle anyone needing care home accommodation to ask the local authority to contract for this, regardless of their financial circumstances. After the survey was completed, and the results submitted to DHSC, it was announced that those reforms would be deferred for two years, and we are not certain whether they will now proceed in their original form.

Because local authorities usually at present contract only for people who cannot afford to pay care home fees themselves, the reforms would have made local authorities responsible for many people who under the current system would contract with a care home privately. Since many care homes for older people charge higher fees to private residents, this could have caused significant financial issues for both care home operators and local authorities. The Government's expectation was that the survey would provide an indication of the extent to which fees paid by local authorities might need to rise as this change took effect, to minimise the impact on care home operators. The Government had also carried out financial modelling which suggested that many local authorities were paying fees for both care home accommodation and visit-based home care services which were not as high as was necessary to sustain the long-term viability of the services.

DHSC published an impact assessment about the charging reforms that the Government was expecting to introduce in 2023 which explains their expectations about the impact of the reforms on care homes, and the increases to fee levels likely to be required.

Guidance about the "fair cost of care" survey was published in July 2022.